Chris Jacobs: An Obamacare Lesson for Small Health Insurers?

In 2011, analysts were speculating that Assurant Health might exit the insurance business, the Milwaukee Journal Sentinel reported last week. So the recent news that Assurant’s parent company was looking to “sell or shut down” the insurance carrier by year’s end was not a total surprise. The issue now is whether its demise holds larger lessons about Obamacare’s impact on insurance markets.

One analyst called Assurant, which reported operating losses of nearly $64 million in fiscal 2014 and $84 million in the first quarter of fiscal 2015, a “casualty” of the law. The Affordable Care Act “required health plans to cover a package of basic benefits and required health insurers to spend at least 80 cents of every premium dollar on medical care or quality initiatives,” the Journal-Sentinel reported. Simply put, the law made health insurance more like a regulated utility—with plan designs, benefits, and overhead costs strictly regulated.

Obamacare supporters generally argue that these regulatory changes eliminate the potential for customer confusion or the sale of “substandard” insurance products. But further Journal-Sentinel reporting underscores a complication of that approach: